Cashstar Fast Track Success in Mpayments Paper

FAST-TRACK SUCCESS IN

mPAYMENTS, LOYALTY &

OMNI-CHANNEL ENGAGEMENT

Using the Tools You Already Have

FAST-TRACK SUCCESS IN mPAYMENTS, LOYALTY & OMNI-CHANNEL ENGAGEMENT

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TABLE OF CONTENTS

Introduction ......................................................................................................................................... 3

Focus on the Data ................................................................................................................................ 4

Reality Check ....................................................................................................................................... 5

The Strategic Business Case ................................................................................................................. 6

Case Study: Starbucks .......................................................................................................................... 8

Action Plan .......................................................................................................................................... 9

Branded Currency: What Will Happen Next? ...................................................................................... 11

Summary and Next Steps ................................................................................................................... 12


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INTRODUCTION: WHY mPAYMENTS?

Today, the discussion about mobile strategy isn’t complete without a focus on payments. Not only has

consumer smartphone adoption finally tipped, using digital wallets for mobile payments in-‐store is a natural extension of existing consumer behavior. Smartphone users already use their phones in-‐store to

redeem coupons, look up product information, and compare prices.

So Apple, Google and Samsung have installed mobile wallets into their smartphones, helping consumers become more comfortable with mobile payments. Likewise, financial institutions, mobile carriers, app

developers, and others are unveiling new mobile payments offerings for consumers on a seemingly daily basis.

The question for retailers is whether to just sit on the sidelines as the battles among these third

parties run their course and the winners emerge?

The answer depends on whether the retailer wants to maintain control of the customer experience, customer relationship and – importantly – the customer data on which next-‐generation loyalty and

personalized omni-‐channel engagement programs will be based, or if they are comfortable relinquishing these to third parties.

Mobile payments and loyalty may sound like a big hairy challenge, but in fact most retailers have the

building blocks already in place to get a solid solution deployed with minimal investment or risk.

So the good news for retailers focused on increasing consumer spend and engagement in the near term, and building more enduring relationships in the long term, is that with relatively little effort and

investment, they can get in the mobile payments game and carve a place in their customer engagement strategies now – rather than having to wait for, or cede, that ground to third parties, or to wait until competitors’ moves force them to take action and try to catch up from behind.

This whitepaper will explore:

How mobile payments are specifically revolutionizing retailers’ marketing toolkits by linking the once divergent areas of coupons, gift cards and loyalty points into Branded Currency

The opportunities that exist for forward-‐thinking and early adopters of mobile payments strategies

Key next steps to getting on the path to success


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FOCUS ON THE DATA: WHAT THE MARKET’S TELLING US

US mobile payments will reach $90B in 2017,

driven by proximity (in-‐store) mobile payments. (Source: Forrester Research Mobile Payments Forecast 2012-‐2017, US)

38% of retailers say they believe mobile will

help drive sales in stores, and 82% say they are making technology investments in mobile. Source: The eTailing Group

In a survey of 4,000 smartphone users, 51%

said reward points stored on their phones would spur mobile payment usage. 32% said the ability to track receipts. 21% said

preferential treatment at retailers. 20% said coupons. Source: Accenture

Sixty percent of consumers who already make

mobile payments said they would probably do

so more often if they received instant coupons from retailers, while some 36% said they would hand over personal information in exchange for such rewards. Source: American Banker

Usage of brand/retailer mobile apps is high among eGift Card purchasers and recipients, with over 50% of downloaders using apps

from brands or stores at least weekly. The most common uses among brand/store app users are coupons, discounts and sales.

Source: CashStar

Consumers were revealed to be 50 percent more likely to say they would use a mobile

wallet provided they were given perks. Source: ICM

Nearly half (46 percent and rising) of gift card recipients are interested in storing gift cards on a mobile device. Source: First Data

REWARD POINTS: 4,000

51%

SAY POINTS ON PHONE WILL

SPUR MOBILE USAGE

$90B IN MOBILE PAYMENTS

BY 2017 60%

http://www.internetretailer.com/2013/08/02/most-retailers-expect-holiday-web-sales-grow-least-10

http://www.americanbanker.com/bankthink/give-consumers-incentive-to-adopt-mobile-payments-1058896-1.html?zkPrintable=1&nopagination=1

http://www.cashstar.com/blog/the-coming-branded-currency-revolution/#more-2167

http://www.mobilepaymentstoday.com/article/212165/Survey-consumers-want-financial-tools-coupons-to-adopt-mobile-payments

http://nfctimes.com/news/research-firm-uk-consumers-interested-mobile-wallets-barriers-make-takeoff-very-unlikely-2013

http://www.firstdata.com/en_us/insights/Perspectives_CIS_Prepaid.html


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REALITY CHECK: IT’S TIME TO TRANSFORM

Smartphone users already use their phones in-‐store to redeem coupons, look up product information,

and compare prices. But it’s even more important to note that consumers are already using value-‐added services on their phone.

Forrester Research’s 2013 North American Technographics Retail Survey revealed a 10% year-‐over-‐year increase in consumers storing Gift Cards on their phone, an 11% increase in finding/redeeming coupons or coupon codes and 7% increase in accessing loyalty and rewards. Expect these numbers to continue to

rise year-‐over-‐year as mPayments adoption accelerates.

To ensure success, retailers need to stay a step ahead of consumer behavior and continue to improve the customer experience across all channels. An essential step in doing so will be to continue to add

value to existing programs via transforming legacy assets into strategic advantages.

Three key areas to begin with are:

Transforming your mobile app into a mobile wallet

Transforming your gift cards into mobile payment and loyalty cards

Abandoning a siloed approach to payments, offers, and loyalty in favor of a unified branded currency and omni-‐channel engagement strategies


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THE STRATEGIC BUSINESS CASE:

PUTTING TRANSFORMATION IN PERSPECTIVE

An Excerpt from The Harvard Business Review Blog Network

MOBILE IS DRIVING A BRANDED-‐CURRENCY REVOLUTION

By Gene Cornfield, Vice President of Marketing, CashStar

and Mark Bonchek, Chief Catalyst, ORBIT

Coupons. Gift cards. Loyalty points. These tried-‐and-‐true tools of the retail trade might not be as sexy as

other forms of marketing. But together they account for more than $165 billion in purchasing power ($110 billion in gift cards purchased, $48 billion in loyalty

points earned, and more than $5 billion in product coupons redeemed). That's almost as much as total e-‐commerce sales.

These instruments share a common objective: to influence purchase decisions by equipping consumers with incremental spending power for specific brands and retailers. But consumers use them independently and individually (combining their value, when possible, takes a lot of manual effort), and

store them in different places — often in drawers or folders where they lay forgotten and unused.

This is changing as coupons, gift cards, and loyalty points all become digital — and, more important,

mobile. Mobile enables all of this purchasing power to converge in one place, and potentially be used interchangeably and collectively, always within easy

reach for consumers.

What does this mean for retailers and brands? The mistake would be to think that they can keep

doing what they have always done, but just add a little digital to it. Instead, retailers need to think about coupons, gift cards, and loyalty points not

only as three separate tools, but as different forms of Branded Currency.

Economists define currency as a store of value and a medium of exchange. All of these instruments are

stores of value, and by going digital and mobile, they become far more effective mediums of exchange.

MORE THAN $165 BILLION in purchasing power

MOBILE enables this purchasing

power to converge

Retailers need to think about coupons, gift cards, and loyalty

points as different forms of Branded Currency.

http://blogs.hbr.org/cs/2013/07/the_coming_branded-currency_re.html


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THE FIRST WAVE

The first wave of this convergence has made it easier for consumers to use their coupons or points for

payment. Card-‐linked offers enable consumers to load coupons to their credit cards or loyalty accounts in advance of purchase. Valid offers are automatically applied as a credit when consumers' cards are scanned at the point of sale. Consumers like it because they don't need to remember or present

individual coupons. Another approach is Shop-‐with-‐Points. As an example, Amazon enables consumers to use their credit card loyalty points as a way to pay for purchases on the site. Shoppers can see their balance and apply their points as easily as using a gift card or credit card.

THE SECOND WAVE

Where the first wave made possible convertibility, the second wave introduces much greater convenience. Mobile wallets, like Apple's Passbook, bring coupons, gift cards, and loyalty cards together in one place without the constraints of a physical wallet. This innovation is good, but it's a bit of a

horseless carriage, still tied to the mental model of a wallet. Consumers still need to manually figure out which instruments can be combined and which cannot, prioritize them based on expirations, calculate the math on their own, and then present them at point-‐of-‐sale one at a time.

THE THIRD WAVE

The third wave will be the mobile portfolio manager, the automobile to the mobile wallet's horseless carriage, which marries the convertibility of the first wave with the convenience of the second. When

you treat coupons, cards, and points as convertible instruments, fully leverage the power of digital and mobile technology, and add intelligence into the system, you get an entirely new possibility: calculating and comparing purchasing power, converting currencies, prioritizing usage, and dynamically creating

scannable barcodes or other methods for combined payment. Soon consumers will be managing their Branded Currency the way they use Mint to manage their bank, credit, investment, and other financial accounts.

There is a lot of talk these days about brands as publishers. But the successive waves of Branded Currency suggest that retailers will also need to think like bankers who mint their own currencies. Market leaders will be those who best help consumers manage and spend Branded Currency from their

portfolios, offer the best exchange rates, create the most liquidity, and make the most efficient markets.

Read the complete HBR post.

Retailers who adopt and execute smart Branded Currency strategies will gain relative share of wallet and have deeper,

more enduring relationships with consumers.

http://blogs.hbr.org/cs/2013/07/the_coming_branded-currency_re.html


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REAL WORLD CASE STUDY: STARBUCKS

In 2011, Starbucks launched Android and iPhone apps that enabled customers to mobilize and easily

reload their plastic cards or purchase new digital gift cards. Most Starbucks customers use the gift card not as a present for others, but as an easy way to pay for purchases, redeem offers, and earn rewards. In

effect, they transformed their gift card into a mobile payment/loyalty card and their mobile app into a wallet for their Branded Currency. Over 7 million people now use Starbucks' mobile app to make 4.5 million payments a week, accounting for at least 10% of Starbucks total U.S. revenue. Over 10 million

Starbucks eGifts, the digital version of a gift card, have been sent just since 2012.

The strength of Starbucks strategy is not in any single program or promotion. It is the way that the entire Branded Currency system works together to provide an integrated and seamless experience for

the customer. They knit together a variety of technologies and platforms from Apple, American Express, CashStar, Facebook, Square, and daily deal providers to promote and execute their deals, offers, and payments across digital, mobile, and social channels. But most importantly, by having its own Branded

Currency system, Starbucks maintains control over the customer experience, relationships, and data.

And while Starbucks is somewhat unique in terms of their high-‐frequency and low-‐spend-‐per-‐visit, the same tactics Starbucks has employed can be implemented by any retailer, albeit modified to their

unique frequency/spend-‐per-‐visit profile, as well as the profile of their target customers.

4.5M mobile payments

per month

10% of U.S. revenue


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ACTION PLAN: START WITH WHAT YOU ALREADY HAVE

These building blocks include a digital gift cards program, a mobile app and loyalty program. And even if

you don’t have these foundational items in place, it’s easy to set them up. Here’s a four-‐step process for getting started that’s easier than you think.

1 Transform If you already have a plastic and/or digital gift card program, the next step is to transform gift cards into mobile reloadable payment cards. That transformation is possible by enabling your mobile app to store and manage your brand’s plastic or digital gift cards.

Unlike plastic gift cards that often go forgotten and unused, mobile phones are always with consumers. Mobilizing your gift cards, and thereby transforming your app into a mobile wallet, will help accelerate redemption of unused balances, and drive the sales lift that comes from purchases made above the value of the gift card.

Consumers benefit from the added convenience and enhanced features like being able to merge multiple cards with unknown balances into a single mobile card that displays one, always-‐current balance.

Better still for retailers, adding plastic gift cards to mobile wallets turns anonymous cardholders into known individuals that retailers can message and market to, in order to reclaim millions of dollars in unredeemed revenue, and as the basis to forge increasingly personalized, ongoing relationships, when the remaining steps are followed…

2 Integrate: Loyalty, Offers, Non-‐Mobile Marketing, Web Site, In-‐Store First, make your loyalty program a core part of your mobile app experience. Having your mobile payment card double as your loyalty card increases convenience for your customers and gives them a reason to download, and to continuously use, your app. Further, if payments made with the mobile card carry added benefits – such as double or triple point values, accelerated reward achievement, or other exclusive benefits – you ensure that customers are incentivized to re-‐load their card (which costs you less than any other form of payment) and to present it with every purchase (which ensures you capture associated data). Next, integrate your coupons and offers into your mobile app. Amplify and accelerate the redemption-‐reload virtuous cycle by making certain offers available only if they are redeemed and/or paid for using your in-‐app mobile payment-‐loyalty card. Then promote such card-‐linked offers through your non-‐mobile marketing channels, and you’ll drive downloads of your app, uptake of your mobile payment-‐loyalty cards, and enrollment in your loyalty program. Once your customers can see their Branded Currency holdings (card balance, loyalty earnings, and coupons/offers) in one place as a single, aggregate value, now display that value to them


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when they’re logged into your website, in your email or catalog communications to them, when they walk into your store, or scan an item’s QR code in your store.

3 Engage, Learn, Exchange Now that you’ve given your customers a great reason to download and use your app on an ongoing basis, the next step is to keep them engaged so you can drive sales. It’s time to take advantage of mobile devices’ unique capabilities:

– Use location-‐based or time-‐based mobile notifications to prompt customers to spend their unused card balances in-‐store or online. Test adding limited-‐time purchase

incentives or other benefits to notifications to measure any increase to response rates and sales. Also experiment with mobile flash sales that are exclusive to your mobile app/card users as another way to both drive adoption of your app/card/loyalty

program, as well as increasing engagement and purchases among those customers. – Deliver other simple, engaging experiences unique to how consumers use/interact

with your brand. Integrating with social platforms, deliver on-‐brand tops, video,

gamification, and other valuable content/experiences that will compel customers to share non-‐purchase-‐related data with you, so that you can get to know them better as individuals.

– Increase personalization based on data by delivering content, offers and rewards based on everything you know about your customers – purchases, preferences, likes, friends, offers redeemed, location, etc.

Taking these first steps of deploying a mobile payments system – and ultimately a unified and omni-‐

channel Branded Currency strategy – will deliver an aggregate value that is much greater than the sum of its parts.

You’ll establish and enjoy deeper, stronger, mutually beneficial, and more enduring customer relationships.

Increased engagement & spend

Personalized marketing

Emotional attachment

Impassioned advocacy


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BRANDED CURRENCY: WHAT WILL HAPPEN NEXT?

Many technology companies including Apple, Google, eBay and Square are hoping brands will rely on their platforms to integrate and manage coupons, offers, gift cards, payments and rewards.

Apple has been quietly creating a platform for managing branded currency in the form of its Passbook app and a newly filed patent. If brands aren't careful, they will be as beholden to Apple for digital and mobile coupons, payments, and loyalty as record companies are for digital music, book publishers are to

Amazon for digital books, and social game publishers are to Facebook. As the market for Branded Currency converges and grows, brands will fall into three categories.

1 Losers Some brands will continue to operate their coupons, deals, offers, gift cards and loyalty programs the way they always have, as separate standalone programs, and will adopt mobile technology

reluctantly. These brands will steadily lose their competitive edge and share of consumer spending.

2 Laggards Some brands will play catch up, adopting best practices after they are widely accepted, and rely on the platforms developed by technology and financial services companies. They will stay in the game, but

will be in the middle of the pack, unable to control the customer experience, lacking full access to their data, and losing margin to the platform provider.

3 Leaders A few brands will set the pace by creating an integrated approach to using Branded Currency as a vehicle for customer engagement. They will aggregate deals, offers, payments, and loyalty; unify

online and offline; and put mobile at the center. They will work with other third-‐party platforms and wallets, but not be beholden to them. As a result, they will use their data to create value for their customers and bring a unique brand experience to every touchpoint. They will enjoy increased

frequency and spend, forge stickier relationships, and greater and more sustainable profitability. Will you be a loser, laggard, or leader? History, current trends, and the billions of dollars at stake would

suggest it's time to start building your Branded Currency strategy and system now.


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SUMMARY & NEXT STEPS

Mobile payments and their role in omni-‐channel engagement, sales, and loyalty strategies represent a largely untapped but huge opportunity.

For retailers looking to fast-‐track success and deliver a unified omni-‐channel customer experience using

the resources you’ve already invested in, turning your gift card platform into a mobile, reloadable customer engagement and loyalty tool is a smart and easy strategic move whose near-‐ and long-‐term benefits easily warrant the minimal investment.

KEY TAKEAWAYS

Transform your existing app into a mobile wallet for storing, organizing & paying with your brand’s gift cards

Convert your gift cards into mobile payment cards that are reloadable & integrated with your

loyalty program

Integrate variety of mobile & social marketing into your existing apps for personalized customer

engagement in-‐store, online, and on-‐the-‐go

To learn more about CashStar’s offerings,

please contact us:

[email protected] www.cashstar.com

http://www.linkedin.com/company/cashstar?goback=%2Efps_PBCK_cashstar_*1_*1_*1_*1_*1_*1_*2_*1_Y_*1_*1_*1_false_1_R_*1_*51_*1_*51_true_CC%2CN%2CG%2CI%2CPC%2CED%2CL%2CFG%2CTE%2CFA%2CSE%2CP%2CCS%2CF%2CDR_*2_*2_*2_*2_*2_376658_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2&trk=company_logo

https://twitter.com/CashStar_Inc

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Cashstar Fast Track Success in Mpayments Paper